Small ticket transactions make up for a large chunk of payments on the UPI platform and combined with the recent launch of UPI123pay for feature phones could further expand the adoption of the payments means, especially in semi urban and rural areas. 

UPI or the Unified Payments Interface is already the most popular mode of digital payments accounting for 51.54 per cent or 4,056.08 crore of the total 7,869.43 crore digital transactions this fiscal year. 

But the absence of internet connectivity and smart phones for a large number of consumers means that UPI is out of bounds for them as a means of payment. 

Feature phone users

India has about 118 crore mobile phone users. Of this, there are more than 40 crore feature phone mobile subscribers in the country and the Reserve Bank of India is hopeful that UPI123pay will materially improve the options for such users to access UPI. 

The National Payments Corporation of India has set a target of 1 billion UPI transactions daily in the next three to five years. 

“UPI has changed the game. The number of transactions through UPI is increasing exponentially because of convenient. For banks like ours, many of our customers are in semi-urban and rural areas and many don’t have smart phones. If UPI is enabled for them on feature phones, they get liberated and can transfer the money conveniently. It will be a big success,” said B Ramesh Babu, Managing Director and CEO, Karur Vysya Bank. 

Transactions on UPI

Payments on the platform have been rising steadily and have remained above the ₹8 lakh crore mark for the last three months. 

Of this, small value transactions make up for a significant portion, as can be gleaned from data from the NPCI. 

Payments up to ₹500 made up for 59 per cent of the P2P transactions through February in terms of volume and 78 per cent of the P2M transactions through the platform last month, as per NPCI data. 

In February 2022, 452.74 crore payments valued at ₹8.26 lakh crore were made through UPI. Of this 263.16 crore transactions worth ₹6.63 lakh crore were P2P and 189.58 crore transactions amounting to ₹1.63 lakh crore were P2M. 

“For purchases amounting to less than ₹200, the share of UPI has continued to surge. Small ticket items such as- biscuits, chips, cigarettes, confectionery, milk is most likely being paid through UPI,” said an annual study ‘Decoding Informal BNPL’ by OKCredit. 

However, experts also point out that there are concerns still over security and customer awareness and education for its mass adoption. 

“The UPI 123Pay truly is an inclusive financial design product from RBI. We need to meet the rural or lower economic segments where they operate – feature phones, low bandwidth or no internet, vernacular support, and an easy to manage approach,” said Amit Das, CEO and founder, Think360.ai, but noted that for the success of such an initiative, there are three big investments –device and data security, customer education and dispute resolution. 

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